(Reuters) -Air Canada reported a lower second-quarter profit that came in ahead of analysts' estimates on Wednesday, as excess capacity in certain markets and stiff competition on international routes softened fares.
North American carriers are struggling to protect their pricing power as a rush to cash in on booming demand for summer travel left them with excess capacity, forcing them to offer discounts to fill seats.
Last month, the carrier cut its full-year core profit forecast citing a lower yield environment and competition in international markets.
Nevertheless, Montreal-based Air Canada said it plans to increase its available seat mile (ASM) capacity during the third quarter between 4% and 4.5%, compared with the same three months in 2023.
Airlines are also facing heightened costs associated with labor and aircraft maintenance.
Air Canada is yet to finalize a new contract with the union representing its pilots, which would generate additional cost pressures for Canada's largest airline.
The carrier's adjusted profit fell to C$369 million ($268.52 million) or C$0.98 adjusted earnings per diluted share, from C$664 million, or C$1.85 per share, a year earlier.
Analysts on average were estimating adjusted earnings per diluted share of C$0.92 per share, according to LSEG data.
The Canadian carrier's operating revenue rose 2% to C$5.52 billion in the quarter ended June 30, roughly in line with analysts' estimates of C$5.53 billion.
($1 = 1.3742 Canadian dollars)
(Reporting by Shivansh Tiwary in Bengaluru and Allison Lampert in Montreal; Editing by Maju Samuel and Deepa Babington)
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